InFocus: Overcoming competitive threats
By Olivier Jamaigne and Patricia Lopes

Posted and published on July 26, 2006 in Telephony Online

Next-generation networks are driving radical changes in the content delivery value chain by spawning disruptive business models and enabling players such as Internet-based portals. The Internet Protocol (IP) has given birth to a number of applications like search engines, voice over IP (VoIP), instant messaging, and information services, as well as the advent of e-commerce. In addition, the migration to IP has led to some weakening of control over end-user data and network access by communications service providers.

These changes in the content delivery value chain represent both an opportunity and a threat to service providers. On the one hand, some service providers have been capturing new revenues from non-traditional applications like mobile TV, push-to-talk, and multimedia messaging, and they are poised to expand their position in the content delivery value chain. On the other hand, there is an increasing risk of forfeiting voice communications revenues and missing out on new revenue streams from advertising and content services due to diminishing control over end-user data and network access.

In the near future, players like Amazon, eBay, Google, MSN, and Yahoo! are expected to pose a critical threat given their brand strength, disruptive revenue models, powerful use of end-user data, and geographic pervasiveness. This article discusses how communications service providers can compete, or cooperate, effectively with Internet-based portals.

Radical Changes in the Content Delivery Value Chain

The content delivery value chain is no longer linear, but resembles overlapping circles gravitating around end-users (see Figure 1). End-users have moved to the center of the value chain, with content providers, aggregators, application and platform providers, and service providers surrounding and serving them.

In a linear content delivery value chain, content providers typically extract a large share of the revenue that is created, while service providers exercise influence by controlling access to their network. In a non-linear value chain, a large number of participants enjoy direct relationships with end-users and can leverage these relationships to gain share. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

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